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Foreign Investment and Australian Independence

Danny O. 3 July 2019

The latest figures from the Australian Bureau of Statistics show Foreign Direct Investment (FDI)* reached a record $967.5 billion at the end of 2018. That’s an increase of $84 billion or 9.5% from 2017. It is what capitalist investors would call “a strong result” and bucked the trend among developed capitalist economies which mostly saw decreases in FDI for the year.

The United States remains Australia’s single largest direct investor recording total FDI stock levels of $214.3 billion at the end of 2018. That was an increase of nearly $21 billion or 11% on last year’s total. However, the US share of the total has been slowly decreasing over recent years. In 2016, it was 24.5%, 22.4% in 2017, and 22.1% in 2018.

Despite the downward trend, the US share is still more than double the next single biggest FDI holder, Japan with 10.9%. The UK remains in third with 10.2%. The Netherlands (5.1%) and China (4.1% - not including Hong Kong) round out the top 5.

What are they investing in?

The overwhelming portion of FDI in Australia goes into our mining and resources industry. At the end of 2018, approximately 38% ($365.5 billion) of all FDI was in mining. That is more than the three next largest sectors combined – manufacturing ($108b), financial services ($108b), and real estate ($103b).

The significance of that level of foreign investment in the mining and resources industry should be clear when we consider that approximately just over 50% of all Australian exports come from this same sector. So not only does foreign capital dominate the development of Australia’s vast resources industry, it also has a major bearing on Australia’s trade and our wider economy as a whole. What’s more, nearly 80% of Australia’s mining and resources industry is owned by foreign multinationals and investors. It is in this sector of the economy that imperialism’s grip on Australia is most stark.

China rising, but US still top dog

Recently, it’s not unusual to hear concerns from some sections of the people that Australia is being “taken over” by China. But what do the statistics say?

In terms of FDI, China had just over $40 billion invested in Australia at the end of 2018. That’s five times less than the US. But China’s levels of investment have certainly been increasing. In 2008, China had just $3.6 billion in FDI in Australia, meaning its total stock has increased 11-fold in the last 10 years.

On the other hand, US direct investment increased just over 2-fold in the same period of time. But that 2-fold increase was the equivalent of over $100 billion – more than 2.5 times China’s total FDI to date!

A look at total foreign investment levels in Australia, of which FDI is just a part, paints a similar picture. FDI made up just 28% of all foreign investment here in 2018. 52% was in portfolio investment**.

According to ABS statistics, the leading investor countries in Australia by all types of foreign investment at the end of 2018 were:

China ranks just ninth. Its investment in Australia compared to the United States is rather miniscule. What’s more China’s total investment levels have shrunk for the last two years running, decreasing by more than $20 billion since 2016.

If Hong Kong’s numbers are added to China’s the picture changes somewhat, but the conclusion remains the same. While China may be the new global power on the rise, it is still far and away the United States that is top dog when it comes to foreign investment in Australia.

The strong opposition to foreign investment among the Australian working class and people feeds into the stream of struggle for Australian independence. But we cannot allow this opposition and struggle to be based on racism and xenophobia or narrow reactionary nationalism. We shouldn’t oppose foreign investment just because it comes from a country whose people speak a different language or aren’t white.

Our support for Australian independence and opposition to foreign investment must be based on fact, not fear mongering and irrationality. Yes, Chinese investment and interest in Australia and the region is increasing, but it is the United States that has already “taken over” Australia. It dominates economically with its multinational corporations controlling important sectors of our economy. It dominates militarily with its bases and marines on Australian soil and integration of our military into the US imperialist war machine.

We fight for socialism and revolutionary anti-imperialist independence from all big power domination of Australia. We should not turn a blind eye to the rise of China, but nor should we forget that it is US imperialism that is the power behind the ruling class in this country and the main enemy of the people of world. We do not choose one over the other, but oppose both. Currently, it is against US imperialism that the main blow must be struck if working people are ever to take power into their own hands.

*Foreign direct investment is defined as foreign ownership of 10% or more of a company
**Portfolio investment is defined as foreign ownership of less than 10% of a company